3 bills to re-evaluate yearly

Want to save thousands of dollars over time? Spend one day a
year re-evaluating your insurance policies.

At that time, examine your homeowners, auto and life insurance
policies to make sure you’re still getting a great deal relative to
your coverage levels.

If that sounds dull, imagine a trip to a Caribbean beach you
paid for with money you’ve shaved off premiums.

Here’s what you should look for during your annual insurance
checkup:

Homeowners insurance: First,
make sure you’re adequately covered. Some homeowners make the
mistake of covering their house only for the amount they paid. But
if you snagged a great deal on your home, you may have bought it
for less than the cost to rebuild.

Use a website such as AccuCoverage.com to find the “replacement
cost” of your home — which is the cost of reconstructing your house
from scratch at today’s prices.

Make sure you have sufficient coverage for your possessions as
well. Policies will vary with regard to how much they’ll reimburse
for damage to your “chattel personal,” which is industry-speak for
“your stuff.” If you own any items of particular value, such as
art, antique furniture or jewelry, you may want to buy additional
insurance. I once bought insurance to specifically cover a
high-performance bicycle.

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Auto insurance: Did you
finance your car? Many lenders require you to carry comprehensive
and collision coverage for the vehicle’s purchase price until your
loan is fully paid. Once your car is very old and not worth much,
consider dropping comprehensive and collision.

Auto insurance companies are introducing new products and
services that reward good driving habits. Progressive, for example,
rolled out a Snapshot program in which an electronic device in your
car offers a personalized insurance rate based on your driving
habits. This service didn’t exist five years ago — and it’s just
one example of how insurance companies are rolling out new
technologies that could potentially lower your rate.

Life insurance: Perhaps you
bought life insurance for yourself or a loved one five years ago.
Back then, both you and your spouse worked, you only had one child
and your mortgage balance was $150,000.

But in the intervening years, you (or your spouse) left the
workforce, causing the family to rely on one income. You had
another child. You also bought a larger house, increasing your
mortgage balance to $250,000.

You can see why there would be need to adjust your life
insurance accordingly. Among other things, make sure your life
insurance adequately covers the cost of hiring people to perform
tasks that the deceased previously did.

Paula Pant blogs at AffordAnything.com about creating wealth
and living life on your own terms. She’s traveled to nearly 30
countries, owns five rental properties and owes her great life to
strong money-management principles. Follow Paula on Twitter @AffordAnything.